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  • Varun Khanchandani

How Artificial Intelligence has transformed E-commerce?

Having scrolled through Amazon today to find a pair of shoes, I realized how reliant I have become on online shopping to cater to my needs. My parents attribute this to a lazy behavioral trait, but there was more to this. As I continued to look for my desired kicks, I sensed that the computer behaved like a traditional salesman- recommending alternate color options, offering similar price ranged brands and topping it off with a pair of matching socks.

How AI has transformed E-commerce

How Artificial Intelligence transformed E-commerce. Image Credits- The Great Learning

The evolution of e-commerce

When the World Wide Web was developed in 1991, few could have predicted its humongous impact on the retail industry. It all started in 1994 when Pizza Hut started accepting orders online, setting the foundation of e-commerce.

eBay and Amazon were formed in 1995 and became pioneers of this mammoth e-commerce movement. Within a year, online sales surpassed the $1 billion mark, while the year 2000 saw another milestone with online sales exceedingly over $25 billion.

In the 2000s, which saw the growth of the concept of social media, the online retail industry gained a significant boost- with a monumental increase in the number of Internet users. The decade, starting 2005, could be considered the golden era of the industry, with several established e-commerce portals gaining pace and the total e-commerce sales being valued at $145.38 billion in 2009.

Influence of Social Media: The Era of 2010s which shaped up the modern e-commerce space

influence of social media

How Artificial Intelligence transformed E-commerce. Image Credits- Ice Cube Digital

Social media is arguably one of the greatest modern inventions, birthing the term- “It’s a Small World”- connecting people across borders, with a business meeting in New York being attended by associates in Tokyo, as if they are sitting right opposite to the boardroom.

Twitter and Facebook had already consumed the growing base of online users. With the advent of the decade, starting from 2010, social media spaces like Instagram and Snapchat came to the forefront. As the power of the internet rose, users started exploring feeds of their social media handles to hunt for solutions that cater to their needs, with e-commerce giants capitalizing with adverts and giving birth to the industry of “digital media marketing”.

Instagram symbolizes the power of social media as an instrument for online marketing. The concept of modern social media portals like Instagram relies on visuals- a perfect opportunity for marketers to display what they have to offer. Instagram soon became the home of influencers, a platform for brands to share their story via images and build a connection with their audience. When Instagram reached 1 billion users a month, it painted a picture of how social media has transformed into the foundation of the modern e-commerce space. Facebook, Instagram’s parent company, earned $17.4 billion in advertising revenue in the 3rd quarter of 2019.

The face of E-commerce now

Throughout the years, from 2014 to 2017, the growth rate for the industry was 25.6%, with this growth attributed to the substantial increase in users of emerging markets like India, Brazil, China, to name a few. In the year 2019, the total e-commerce sales globally totaled a whopping $3.5 trillion.

As the pandemic struck the globe at the end of 2019, the e-commerce industry had a meteoric rise- due to the lockdown closures and social distancing norms, which became the “new normal” ever since. The total e-retail sales are expected to reach $6.54 trillion by the end of 2022. The United States alone contributes $865 million to this projected figure, as retail markets throughout the world crumble to face these e-retailers.

This transition in the customer buying behavior has been credited to the debate of “traditional shopping methods against modern tech innovations”. Customers have been shifting to the e-retail side, predominantly due to the ease of purchasing. E-commerce being borderless, availability of any product, from anywhere in the world, could be at your doorsteps within a week. The e-com portals have implemented Artificial Intelligence, and now use data-driven insights to analyse the customer’s journey on the website- with every piece of the jigsaw falling in place, as soon as the customer enters the site. This leads to an interesting research study of how AI has revolutionized the process of online shopping.

How AI has crept into the e-commerce industry

How AI has crept into the e-commerce industry

How Artificial Intelligence has transformed E-commerce. Image Credits- The Economic Times

The term AI is no longer a "buzzword" in technology, with several industries across the globe implementing artificially intelligent tools for accurately predicting human behavior.E-commerce is no exception.

As per a report in Gartner, 80% of interactions made by the end-user will be driven by AI on e-commerce portals. 20% of the visitors use chatbots to guide their purchasing behavior, with 40% of these visitors using chatbots to understand pricing, incentives, and other offers.

AI was responsible for conducting $8 billion sales in the e-commerce segment, with the number expected to rise to $49 billion in 2021, around 6 times the base value. This shows the growing significance of implementing AI to keep up with the market trends.

Your Feed has become Personalized

  • Artificial Intelligence has powered a new way of understanding consumer behavior, and personalized “attention”, while engaging the customer for an interactive buying experience.

  • Feeds are now based on personal preferences like gender, brands, sizes, colors and budget.This entails demographic criteria while giving a sense of a salesperson’s availability for the virtual customer.

  • Artificial Intelligence powered feeds are now paving the way for a huge “upsell” opportunity for sellers. Automatic suggestions, for complementary and sponsored products, have enhanced sales,benefitting both the customer and the seller.

Searching has become smarter

  • As a visitor on the platform, being able to efficiently search for your desired query becomes a significant factor for the portal's conversion rate.

  • Grammatical errors, as well as wrong inventory listing, often lead to wrong search results. This could hamper the prospective seller's chance of making the sale.

  • Customers are often thrown off by errors like "this product does not exist" or "could not find the product".

  • E-commerce companies have embedded an "Auto-Suggest Feature"- auto typing the customer's desired search along with a preview of the related products on the grounds of the search.

Voice Assisted Searches have become a trend

  • The user experience has become the battleground for e-commerce companies- with deep tech trends enabling smoother and efficient customer journey on the portal.

  • Voice-enabled searches have become one of the newest trends, wherein customers can just speak into a smart device to find their desired result.

  • E-commerce giants Amazon have their Echo technology, while Google uses Cortana that changes the dynamics of surfing through an e-commerce portal.

  • The ideology of such an invention is to derive customer’s convenience by using their natural speech to find what they want.

AI-empowered visuals have led to higher website traffic

  • Based on the success of Instagram, visuals have been a critical avenue for generating interest for the customers to convert prospects into sales

  • With the ability of AI to use images, shared by the user, - the visitor gets pertinent results of relevant products which leads to higher chances of sales.

  • Companies like ASOS have utilized AI-based visual search engines to optimize product views- depicting various angles like higher zooms, without affecting image quality.

  • This has led the customer to tackle the pre-conceived notion that e-commerce portals usually are unreliable in terms of product quality,i.e., what you see online is not usually what you get.

AI on the E-commerce Marketing

  • If you have missed something in your cart, you are immediately notified via mail about "how you've forgotten the product" in the cart. This is possible due to artificially intelligent portals re-connecting with the prospective buyer.

  • AI tools can accurately predict the behavior of the customer based on the time spent on the website. This evaluates the chances of the customer to make the purchase, understand his choices, and provide the relevant results.

  • This significantly helps the backend, sales and marketing teams to push the customer in making the sale- often devising "Big Shopping Days" that is based on the purchasing patterns on the website.

Inventory Management is also Automated

  • As the volume of online orders has significantly increased, it has led the companies to implement inventory automation.This includes analyzing and predicting turn-around times and SKU numbers as per the number of orders.

  • All purchase information is directly reverted to the inventory management’s smart software and the interaction of the software with the intelligent device.

  • Stocking, packaging, and shipping have all become automated processes in the warehousing department, while information to the customer is relayed with live, on-spot updates.

Why are sellers welcoming of this new technology?

  • Technology assisted 24x7 sales without investing in expensive real estate showrooms/ shopping complexes.

  • Direct product feedback from consumers, with detailed analytics, helps the sellers to formulate roadmaps of future product and sales strategies.

  • Increase in the number of Internet users gives sellers access to a wider audience, with the opportunity to expand into new markets.

The contribution of AI in the development of e-commerce is unparalleled, as deep tech catches the attention of decision makers. The gap between human and machine intelligence has been bridged, with AI being the foundation of modern e-commerce.

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Tharini Sujitha
Tharini Sujitha
Sep 03, 2021

Wow it's an great blog i have come acrossed

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